Limestone Bancorp (LMST) 8-K Porter Bancorp, Inc. Reports Third Quarter 2013 Results

Exhibit 99.1

Porter Bancorp, Inc. Reports Third Quarter 2013 Results

Third Quarter 2013 Net Loss Available to Common Shareholders of $168,000

LOUISVILLE, Ky.--(BUSINESS WIRE)--October 30, 2013--Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of PBI Bank, with 18 full-service banking offices in Kentucky, today reported unaudited results for the third quarter of 2013.

The Company reported that the net loss attributable to common shareholders declined substantially to $168,000, or ($0.01) per diluted share, for the third quarter of 2013 compared with a net loss of $26.9 million, or ($2.29) per diluted share, for the third quarter of 2012. Net loss attributable to common shareholders for the nine months ended September 30, 2013 was $2.4 million, or ($0.20) per diluted common share, compared with net loss attributable to common shareholders of $26.4 million, or ($2.25) per diluted share, for the nine months ended September 30, 2012. The significant reduction in net loss since last year reflected our focus on asset quality remediation, regulatory capital restoration, and lowering the risk profile of the Company.

Third Quarter 2013 Financial Performance Highlights

• Balance Sheet Reduction - We have successfully reduced the size of our balance sheet in accordance with our capital plan. Average assets were $1.056 billion in the third quarter of 2013 compared with $1.105 billion in the second quarter of 2013 and $1.326 billion in the third quarter of 2012. This reduction was accomplished primarily by reducing our commercial real estate and construction and development loans within our loan portfolio and through the redemption of higher cost certificates of deposit accounts.
• Net Interest Income – Net interest income declined to $7.8 million for the third quarter of 2013 compared with $8.4 million in the second quarter of 2013 and $10.1 million in the third quarter of 2012 as our average loans declined to $756.1 million for the third quarter of 2013 compared with $806.9 million in the second quarter of 2013 and $1.008 billion in the third quarter of 2012. Our net interest margin declined to 3.14% in the third quarter of 2013 compared with 3.24% in the second quarter of 2013 and 3.23% in the third quarter of 2012.
• Non-interest Income – Non-interest income decreased $981,000 to $1.2 million in the third quarter of 2013 compared with $2.1 million in the second quarter of 2013 and decreased $554,000 compared with $1.7 million in the third quarter of 2012. The quarter over quarter decline from June 2013 to September 2013 is attributable primarily to a $679,000 reduction in the gain on sales of securities, a $230,000 reduction in income from bank owned life insurance and a $176,000 decline in other real estate owned income.
• Provision for Loan Losses - Provision for loan losses expense declined to $250,000 for the third quarter of 2013 and $700,000 for the first nine months of 2013 compared with $25.5 million for the third quarter of 2012 and $33.3 million for the first nine months of 2012. The significant reduction in provision for loan losses is being driven by the substantial shrinkage of the loan portfolio, declining historical loss rates, and a reduction in loans migrating downward in risk grade classification. Our reserve for loans evaluated collectively for impairment was 4.66% at September 30, 2013, compared with 4.56% at June 30, 2013 and 5.06% at September 30, 2012.
• Non-performing Assets - Non-performing assets, which include loans past due 90 days and still accruing, loans on nonaccrual, and other real estate owned, decreased on a dollar level basis to $148.8 million, or 14.33% of total assets at September 30, 2013, compared with $159.3 million, or 14.86% of total assets, at June 30, 2013. Non-performing loans and other real estate owned still remain at higher than normal levels and continue to impact negatively the Bank’s earnings performance.

Non-performing loans decreased to $106.9 million, or 14.56% of total loans, at September 30, 2013, compared with $112.3 million, or 14.49% of total loans, at June 30, 2013. However, net charge-offs increased from $2.3 million in the second quarter of 2013 to $6.1 million in the third quarter of 2013. Net charge-offs for the nine months ended September 30, 2013 decreased to $25.6 million from $31.8 million for the same period in 2012.

Total past due and nonaccrual loans increased approximately $687,000 to $124.5 million at September 30, 2013 from $123.8 million at June 30, 2013.

		September 30, 2013	June 30, 2013		March 31, 2013		December 31, 2012
		(in thousands)
Past Due Loans:
30 – 59 Days	$	10,018	$	8,600	$	8,052	$	38,219
60 – 89 Days		7,582		2,979		2,960		20,303
90 Days and Over		—		71		—		86
Nonaccrual Loans		106,922		112,185		120,943		94,517
Total Past Due and Nonaccrual Loans	$	124,522	$	123,835	$	131,955	$	153,125

Foreclosed properties at September 30, 2013 decreased to $41.9 million compared with $47.0 million at June 30, 2013, and $48.8 million at September 30, 2012. The Company acquired $3.0 million in other real estate owned and sold $8.0 million in other real estate owned during the third quarter of 2013. Fair value write-downs arising from new appraisals or lower marketing prices totaled $300,000 in the third quarter of 2013 compared with $4.3 million in the third quarter of 2012 and $977,000 in the second quarter of 2013.

• Non-interest Expense – Non-interest expense decreased $3.3 million to $8.5 million for the third quarter of 2013 compared with $11.8 million for the second quarter of 2013 and decreased $5.7 million compared with $14.2 million for the third quarter of 2012. The significant reduction in non-interest expense was attributable primarily to lower loan collection expenses and lower other real estate owned expenses.
• Capital – Our net loss available to common shareholders of $168,000 for the third quarter of 2013 was much improved compared to our net loss available to common shareholders of $1.7 million in the second quarter of 2013. In connection with the recent rise in long-term interest rates, our stockholders’ equity was negatively impacted from June 30, 2013 to September 30, 2013 by an increase in the net unrealized loss in our available for sale securities portfolio from $1.1 million at June 30, 2013, to $2.8 million at September 30, 2013.

At September 30, 2013, PBI Bank’s Tier 1 leverage ratio was 6.40% compared with 6.08% at June 30, 2013, and its Total risk-based capital ratio was 11.04% at September 30, 2013 compared with 10.60% at June 30, 2013, which are below the minimums of 9.0% and 12.0% required by the Bank’s Consent Order. At September 30, 2013, Porter Bancorp’s leverage ratio was 5.15% compared with 4.91% at June 30, 2013, and its Total risk-based capital ratio was 10.78% compared with 10.46% at June 30, 2013.

We are continuing our efforts to strengthen our capital levels and comply with the Consent Order. Management and the Board of Directors are evaluating appropriate strategies for increasing the Company’s capital in order to meet the capital requirements of our Consent Order. These include, among other things, a possible public offering or private placement of common stock to new and existing shareholders. As previously announced, we have engaged a financial advisor to assist our Board in this evaluation.

PBIB-G PBIB-F

Forward-Looking Statements

Statements in this press release relating to Porter Bancorp’s plans, objectives, expectations or future performance are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “may,” “should,” “anticipate,” “estimate,” “expect,” “intend,” “objective,” “possible,” “seek,” “plan,” “strive” or similar words, or negatives of these words, identify forward-looking statements. These forward-looking statements are based on management’s current expectations. Porter Bancorp’s actual results in future periods may differ materially from those indicated by forward-looking statements due to various risks and uncertainties, including our ability to reduce our level of higher risk loans such as commercial real estate and real estate development loans, reduce our level of non-performing loans and other real estate owned, and increase net interest income in a low interest rate environment, as well as our need to increase capital. These and other risks and uncertainties are described in greater detail under “Risk Factors” in the Company’s Form 10-K and subsequent periodic reports filed with the Securities and Exchange Commission. The forward-looking statements in this press release are made as of the date of the release and Porter Bancorp does not assume any responsibility to update these statements.

Additional Information

Unaudited supplemental financial information for the third quarter ending September 30, 2013 follows.

PORTER BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
	Three			Three			Three			Nine				Nine
	Months			Months			Months			Months				Months
	Ended			Ended			Ended			Ended				Ended
	9/30/13			6/30/13			9/30/12			9/30/13				9/30/12
Income Statement Data
Interest income	$	10,543		$	11,168		$	13,987		$		32,969		$	44,554
Interest expense		2,694			2,816			3,855				8,470			12,173
Net interest income		7,849			8,352			10,132				24,499			32,381
Provision for loan losses		250			—			25,500				700			33,250
Net interest income after provision		7,599			8,352			(15,368	)			23,799			(869	)
Service charges on deposit accounts		536			506			563				1,535			1,673
Income from fiduciary activities		—			—			261				517			803
Bank card interchange fees		174			196			180				542			553
Other real estate owned income		54			230			180				396			242
Gains on sales of securities, net		24			703			—				727			3,530
Income from bank owned life insurance		75			305			79				459			238
Other		304			208			458				786			1,145
Non-interest income		1,167			2,148			1,721				4,962			8,184
Salaries & employee benefits		3,837			3,999			4,264				11,975			12,558
Occupancy and equipment		884			913			971				2,728			2,826
Other real estate owned expense		669			1,657			5,204				3,117			7,666
FDIC insurance		578			650			559				1,867			2,264
Franchise tax		537			537			496				1,611			1,680
Loan collection expense		531			2,407			792				3,973			1,738
Professional fees		503			499			776				1,408			1,699
Communications expense		177			179			175				531			523
Postage and delivery		99			102			108				314			339
Insurance expense		171			160			96				482			296
Other		482			706			709				1,835			1,870
Non-interest expense		8,468			11,809			14,150				29,841			33,459
Income (loss) before income taxes		298			(1,309	)		(27,797	)			(1,080	)		(26,144	)
Income tax expense (benefit)		—			—			(65	)			—			(65	)
Net income (loss)		298			(1,309	)		(27,732	)			(1,080	)		(26,079	)
Less:
Dividends on preferred stock		437			437			437				1,311			1,312
Accretion on preferred stock		45			45			44				135			134
Earnings (loss) allocated to participating securities		(16	)		(110	)		(1,264	)			(174	)		(1,095	)
Net income (loss) available to common	$	(168	)	$	(1,681	)	$	(26,949	)	$		(2,352	)	$	(26,430	)
Weighted average shares – Basic		11,592,959			11,761,788			11,751,818			11,701,396				11,732,835
Weighted average shares – Diluted		11,592,959			11,761,788			11,751,818			11,701,396				11,732,835
Basic earnings (loss) per common share	$	(0.01	)	$	(0.14	)	$	(2.29	)	$	(0.20		)	$	(2.25	)
Diluted earnings (loss) per common share	$	(0.01	)	$	(0.14	)	$	(2.29	)	$	(0.20		)	$	(2.25	)
Cash dividends declared per common share	$	0.00		$	0.00		$	0.00		$	0.00			$	0.00

PORTER BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
	Three			Three			Three			Nine			Nine
	Months			Months			Months			Months			Months
	Ended			Ended			Ended			Ended			Ended
	9/30/13			6/30/13			9/30/12			9/30/13			9/30/12
Average Balance Sheet Data
Assets	$	1,056,300		$	1,104,807		$	1,326,457		$	1,103,958		$	1,367,318
Loans		756,132			806,941			1,008,053			811,433			1,068,356
Earning assets		1,006,838			1,050,515			1,261,864			1,055,891			1,306,590
Deposits		965,501			1,008,102			1,196,580			1,008,839			1,235,573
Long-term debt and advances		36,123			36,652			38,328			36,644			38,944
Interest bearing liabilities		903,607			941,059			1,126,045			942,423			1,164,309
Stockholders’ equity		37,995			46,904			81,029			44,180			83,217
Performance Ratios
Return on average assets		0.11	%		(0.48)	%		(8.32)	%		(0.13)	%		(2.55)	%
Return on average equity		3.11			(11.19)			(136.16)			(3.27)			(41.86)
Yield on average earning assets (tax equivalent)		4.21			4.31			4.45			4.22			4.59
Cost of interest bearing liabilities		1.18			1.20			1.36			1.20			1.40
Net interest margin (tax equivalent)		3.14			3.24			3.23			3.15			3.35
Efficiency ratio		94.17			120.54			119.38			103.85			90.34
Loan Charge-off Data
Loans charged-off	$	(7,071	)	$	(3,404	)	$	(23,487	)	$	(28,437	)	$	(32,507	)
Recoveries		1,016			1,124			412			2,811			697
Net charge-offs	$	(6,055	)	$	(2,280	)	$	(23,075	)	$	(25,626	)	$	(31,810	)
Nonaccrual Loan Activity
Nonaccrual loans at beginning of period	$	112,185		$	120,943		$	81,653		$	94,517		$	92,020
Net principal pay-downs		(7,408	)		(8,118	)		(5,768	)		(19,599	)		(15,092	)
Charge-offs		(5,388	)		(3,256	)		(13,442	)		(26,116	)		(20,656	)
Loans foreclosed and transferred to OREO		(2,987	)		(11,875	)		(3,339	)		(18,542	)		(22,411	)
Loans returned to accrual status		(678	)		(421	)		—			(1,099	)		—
Loans placed on nonaccrual during the period		11,198			14,912			29,528			77,761			54,771
Nonaccrual loans at end of period	$	106,922		$	112,185		$	88,632		$	106,922		$	88,632
Troubled Debt Restructurings (TDRs)
Accruing	$	43,968		$	54,927		$	81,930		$	43,968		$	81,930
Nonaccrual		49,255			46,510			35,552			49,255			35,552
Total	$	93,223		$	101,437		$	117,482		$	93,223		$	117,482
Other Real Estate Owned (OREO) Activity (Net of Allowance)
OREO at beginning of period	$	47,030		$	44,192		$	54,365		$	43,671		$	41,449
Real estate acquired		2,987			11,875			3,405			18,542			31,531
Valuation adjustment write-downs		(300	)		(977	)		(4,260	)		(1,584	)		(5,090	)
Proceeds from sales of properties		(8,029	)		(7,898	)		(4,140	)		(18,582	)		(17,573	)
Gain (loss) on sales, net		169			(162	)		(533	)		(190	)		(1,481	)
Capital improvements		—			—			—			—			1
OREO at end of period	$	41,857		$	47,030		$	48,837		$	41,857		$	48,837

PORTER BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)
		As of		As of			As of			As of
		9/30/13		6/30/13			12/31/12			9/30/12
Assets
Loans	$	734,240		$	774,785		$	899,092		$	951,811
Loan loss reserve		(31,754	)		(37,559	)		(56,680	)		(54,019	)
Net loans		702,486			737,226			842,412			897,792
Mortgage loans held for sale		123			133			507			210
Securities available for sale		193,981			176,942			178,476			198,148
Federal funds sold & interest bearing deposits		42,071			56,512			41,161			69,928
Cash and due from financial institutions		11,362			7,754			8,411			11,854
Premises and equipment		20,167			20,368			20,805			20,955
Other real estate owned		41,857			47,030			43,671			48,837
Accrued interest receivable and other assets		26,080			26,166			27,188			38,317
Total Assets	$	1,038,127		$	1,072,131		$	1,162,631		$	1,286,041
Liabilities and Equity
Certificates of deposit	$	658,940		$	690,557		$	760,573		$	882,303
Interest checking		71,851			78,218			87,234			80,524
Money market		77,292			65,620			63,715			63,594
Savings		37,622			40,121			39,227			39,703
Total interest bearing deposits		845,705			874,516			950,749			1,066,124
Demand deposits		101,191			106,320			114,310			111,403
Total deposits		946,896			980,836			1,065,059			1,177,527
Federal funds purchased & repurchase agreements		3,722			3,292			2,634			2,403
FHLB advances		4,741			5,016			5,604			5,960
Junior subordinated debentures		31,075			31,525			31,975			32,200
Accrued interest payable and other liabilities		14,578			12,710			10,169			12,967
Total liabilities		1,001,012			1,033,379			1,115,441			1,231,057
Stockholders’ equity		37,115			38,752			47,190			54,984
Total Liabilities and Stockholders’ Equity	$	1,038,127		$	1,072,131		$	1,162,631		$	1,286,041
Ending shares outstanding		12,846,668			12,322,207			12,002,421			12,007,127
Book value per common share	$	(0.09	)	$	0.04		$	0.74		$	1.39
Tangible book value per common share		(0.21	)		(0.10	)		0.58			1.22
Asset Quality Data
Loan 90 days or more past due still on accrual	$	—		$	71		$	86		$	1,486
Nonaccrual loans		106,922			112,185			94,517			88,632
Total non-performing loans		106,922			112,256			94,603			90,118
Real estate acquired through foreclosures		41,857			47,030			43,671			48,837
Other repossessed assets		11			—			—			5
Total non-performing assets	$	148,790		$	159,286		$	138,274		$	138,960
Non-performing loans to total loans		14.56	%		14.49	%		10.52	%		9.47	%
Non-performing assets to total assets		14.33			14.86			11.89			10.81
Allowance for loan losses to non-performing loans		29.70			33.46			59.91			59.94
Allowance as % of loans evaluated individually		3.06			5.82			11.14			8.48
Allowance as % of loans evaluated collectively		4.66			4.56			5.02			5.06
Allowance for loan losses to total loans		4.32			4.85			6.30			5.68
Risk-based Capital Ratios
Tier I leverage ratio		5.15	%		4.91	%		4.50	%		5.00	%
Tier I risk-based capital ratio		7.19			6.88			6.46			7.03
Total risk-based capital ratio		10.78			10.46			9.81			10.01
FTE employees		260			264			278			291

CONTACT:
Porter Bancorp, Inc.
John T. Taylor, 502-499-4800
President